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Pledging a “commitment to do our part to help kick-start new solutions to this [housing] crisis,” Microsoft president Brad Smith and CFO Amy Hood announced a three-pronged $500 million workforce housing fund to boost affordable housing in the Seattle area.
Writing in a blog post, Smith and Hood emphasized affordable housing solutions require a multifaceted and sustained effort by the entire region but said the Eastside suburbs would be the primary focus of the initiative.
In their announcement, the Microsoft executives acknowledged the gap between job growth and housing production. While jobs in the region have grown 21 percent since 2011, housing construction has lagged at 13 percent. (One countywide report estimates the county needs 244,000 new affordable units by 2040.)
“This gap in available housing has caused housing prices to surge 96 percent in the past eight years, making the Greater Seattle area the sixth most expensive region in the United States,” they stated, noting the gap is more pronounced in the suburbs.
Seattle is the nation’s 18th largest city, but currently has the country’s third-largest homeless population.
On a broader geographic view, King County is far behind planners’ estimates for affordable housing units.
Microsoft’s half-billion-dollar fund, to be spent over three years, is the largest philanthropic commitment in the company’s history. It also coincides with the company’s expansion of its Redmond headquarters in anticipation of hiring 8,000 more employees.
The fund, modeled after a smaller, but similar trust fund in Silicon Valley, will be allocated in three areas:
- $25 million in grants and subsidies to address regional homelessness;
- $250 million in market-rate loans to low-income housing developers whose housing is intended for households with less than $48,150 annual income; and
- $225 million at below-market rates to assist workforce housing developers construct and develop housing units in six Eastside communities for households with $62,000 to $124,000 annual income.
The company plans to make more loans as the initial ones are repaid.
“It will take much more to solve the problem,” Smith and Hood wrote in their blog post, adding “Even more capital will be required. And more critical still is the need for public policy changes to make it easier and more attractive to build affordable housing.”
In making the announcement, the Microsoft representatives cited the important role the communities surrounding its Redmond campus would play in addressing affordable housing concerns. Mayors from nine of the largest suburban cities outside Seattle pledged “vital and concrete steps” according to the Microsoft announcement, which also stated, “This is every bit as important as Microsoft’s financial commitment.”
Microsoft officials said the mayors’ commitments included changes in zoning to increase the pipeline of housing in selected areas, as well as providing desirable public land near transit locations, addressing permitting processes and fees, and creating new tax incentives for construction.
Smith said Microsoft’s new fund followed eight months of analysis of data and best practices for addressing housing concerns.
Along with funds to accelerate the production of low-income housing, Microsoft earmarked $25 million to help combat homelessness. Of that amount an initial $5 million grant was awarded to a recently announced Home Base program created by the Seattle Mariners, the United Way of King County, and the King County Bar Association. Another $5 philanthropic grant will support a new agency on homelessness being formed jointly by the city of Seattle and King County.
In their blog announcing the funding, Smith and Hood emphasized state government’s role in making additional housing investments and implementing policy changes to preserve and develop affordable housing. They said Microsoft would support various measures this legislative session, including condominium liability reforms, extension of the Multifamily Tax Exemption (MFTE), and new incentives for local communities to enact more efficient land use policies.